Alain Bertaud on Housing Affordability

City governments routinely set minimum consumption standards for housing: minimum lot sizes, minimum unit sizes, minimum access street widths, or a minimum of parking spots per housing unit. In a recent brown bag discussion, Alain Bertaud argued that efforts to regulate minimum housing consumption — however well-intended — typically work to price poor households out of the formal housing market and into the informal sector where access to public services is limited or non-existent.

Bertaud pointed out that, by legitimizing informal settlements and relaxing regulations for minimum housing consumption therein, cities can improve housing standards for the poor. The kampongs of Surabaya, Indonesia, for example, are not bound by the minimum standards of formal subdivisions elsewhere in the city. But because the government treats the kampongs as legitimate settlements, the neighborhoods are well-connected to municipal infrastructure. What’s more, people in the kampongs feel confident in their land tenure, allowing structures to evolve with the income of the residents.

Other examples of parallel housing markets that are officially sanctioned include the urban villages in Hanoi and the neighborhoods of handshake buildings in Shenzhen — both of which provide an important source of housing for low income residents.

See the slides form Bertaud’s presentation here.